City fails to collect past-due bonanza

About 1 percent of late water and sewer bills paid

Published: Wednesday, April 17, 2013 at 3:30 a.m.

Last Modified: Tuesday, April 16, 2013 at 11:48 p.m.

TUSCALOOSA | Efforts by City Hall to reclaim significant portions of the annual $400,000 lost in unpaid water and sewer bills has ended in disappointment.

On Tuesday, the head of the debt collection company hired by the City Council to make up these shortfalls reported that efforts to find the debtors and collect the unpaid bills have been exhausted.

The result? About $12,143.64 returned to the Water and Sewer Department.

“We’re disappointed that all this money didn’t come piling in, but sometimes that’s just how it is,” said Martin Sher, CEO of the Birmingham-based debt collection service AmSher. “I hate to report that, but I came up here to give you an honest report of what’s going on.”

AmSher won a bid to serve as the city’s debt collection service in September, based largely on its record of collecting significant amounts of bad debt for the city of Birmingham.

Sher said then that AmSher was collecting on about 27 percent of Birmingham’s delinquent bills.

Tuscaloosa did not see such returns. Rather, the debt that has been successfully collected is about 1 percent of the $1.23 million in unpaid bills that the city turned over to AmSher for collection.

Sher told the City Council during its pre-council meeting that part of the problem was the legal obligation of debt collection services to notify debtors of their legal right to dispute the charges. This slows the process and requires the collection service to obtain proof from the client — the city of Tuscaloosa, in this case — before the funds can be demanded.

Tuscaloosa’s debtors did not hesitate to dispute the charges, Sher said.

“It was the highest amount of disputes I’d seen in a long, long time,” Sher said.

He did, however, offer some options to the City Council for further collection of the debt. Among these was AmSher offering to make follow-up phone calls to try to compel those with outstanding debts to pay their bills.

The council made no indication whether it would pursue additional measures.

LaDonnah Roberts, assistant director of financial affairs and customer service for the city of Tuscaloosa’s Water and Sewer Department, said she was hopeful AmSher’s efforts will lead to more outstanding debts being reclaimed.

“We appreciate that AmSher has offered to continue to partner with us to find ways to recover these outstanding debts even if their scope of services is not as it was originally intended,” Roberts said. “We recognize that recovered funds can be used to the benefit of our citizens. So, it is extremely important to us that we be good stewards of these potential resources.”

The issue was brought to the City Council’s attention by City Clerk Tracy Croom, who had developed the plan to deal with the annual losses as part of her training curriculum through the Certified Public Manager program at the Alabama Training Institute in Montgomery.

In addition to seeking the services of a debt collection service, Croom also recommended placing a bright red warning box on bills for customers who are falling behind on payments and are in danger of having their service disconnected.

This was implemented, and she said she believed it will lead to better debt collection in the future.

The average unpaid bill is less than $60. Croom said that is because the city’s Water and Sewer Department will disconnect service rather than allow the debt to rise to exorbitant levels.

“Their delinquent bill looked just like their regular bill, which didn’t give people a warning that their water was about to get cut off,” Croom said. “But I think it just confirmed what we’ve thought, and that’s that we’re doing a good job in-house to help a customer avoid a delinquent bill.”

<p>TUSCALOOSA | Efforts by City Hall to reclaim significant portions of the annual $400,000 lost in unpaid water and sewer bills has ended in disappointment.</p><p>On Tuesday, the head of the debt collection company hired by the City Council to make up these shortfalls reported that efforts to find the debtors and collect the unpaid bills have been exhausted.</p><p>The result? About $12,143.64 returned to the Water and Sewer Department.</p><p>“We're disappointed that all this money didn't come piling in, but sometimes that's just how it is,” said Martin Sher, CEO of the Birmingham-based debt collection service AmSher. “I hate to report that, but I came up here to give you an honest report of what's going on.”</p><p>AmSher won a bid to serve as the city's debt collection service in September, based largely on its record of collecting significant amounts of bad debt for the city of Birmingham.</p><p>Sher said then that AmSher was collecting on about 27 percent of Birmingham's delinquent bills.</p><p>Tuscaloosa did not see such returns. Rather, the debt that has been successfully collected is about 1 percent of the $1.23 million in unpaid bills that the city turned over to AmSher for collection.</p><p>Sher told the City Council during its pre-council meeting that part of the problem was the legal obligation of debt collection services to notify debtors of their legal right to dispute the charges. This slows the process and requires the collection service to obtain proof from the client — the city of Tuscaloosa, in this case — before the funds can be demanded.</p><p>Tuscaloosa's debtors did not hesitate to dispute the charges, Sher said.</p><p>“It was the highest amount of disputes I'd seen in a long, long time,” Sher said.</p><p>He did, however, offer some options to the City Council for further collection of the debt. Among these was AmSher offering to make follow-up phone calls to try to compel those with outstanding debts to pay their bills.</p><p>The council made no indication whether it would pursue additional measures.</p><p>LaDonnah Roberts, assistant director of financial affairs and customer service for the city of Tuscaloosa's Water and Sewer Department, said she was hopeful AmSher's efforts will lead to more outstanding debts being reclaimed.</p><p>“We appreciate that AmSher has offered to continue to partner with us to find ways to recover these outstanding debts even if their scope of services is not as it was originally intended,” Roberts said. “We recognize that recovered funds can be used to the benefit of our citizens. So, it is extremely important to us that we be good stewards of these potential resources.”</p><p>The issue was brought to the City Council's attention by City Clerk Tracy Croom, who had developed the plan to deal with the annual losses as part of her training curriculum through the Certified Public Manager program at the Alabama Training Institute in Montgomery.</p><p>In addition to seeking the services of a debt collection service, Croom also recommended placing a bright red warning box on bills for customers who are falling behind on payments and are in danger of having their service disconnected.</p><p>This was implemented, and she said she believed it will lead to better debt collection in the future.</p><p>Additionally, Croom said AmSher's lack of success highlighted something city officials had suspected: the city's internal debt collection efforts were already fairly adequate because of the city's efforts to prevent customers' unpaid bills from getting too high.</p><p>The average unpaid bill is less than $60. Croom said that is because the city's Water and Sewer Department will disconnect service rather than allow the debt to rise to exorbitant levels.</p><p>“Their delinquent bill looked just like their regular bill, which didn't give people a warning that their water was about to get cut off,” Croom said. “But I think it just confirmed what we've thought, and that's that we're doing a good job in-house to help a customer avoid a delinquent bill.”</p>